China slams US claims of ‘industrial-scale’ AI theft

What the report says

China has sharply rejected a new US accusation that Chinese artificial intelligence firms are stealing advanced American AI models on an “industrial scale.” The dispute followed a joint advisory from the FBI, NSA and CISA that named companies including DeepSeek, Alibaba and Moonshot AI and alleged they had used a method called distillation to extract large amounts of value from US systems since at least late 2024.

Beijing’s Commerce Ministry said it would respond firmly if Washington used the distillation allegation to pressure Chinese AI firms, while the Foreign Ministry urged the US to stop making what it called unfounded claims. Chinese officials argued that distillation is a common industry practice and portrayed China’s AI progress as the result of domestic technological development rather than theft.

The US advisory said the scale and sophistication of the activity suggested distillation was central to the Chinese companies’ model development. American officials have increasingly tied AI competition to wider economic and security concerns, and the dispute comes shortly before a planned visit by Chinese President Xi Jinping to the US, where artificial intelligence is expected to be among the topics discussed.

More broadly, the episode underscores how AI has become a major front in the US-China rivalry, with Washington moving to limit Chinese advances and Beijing investing heavily in AI and robotics as strategic sectors.